ecent unearthing of frauds funds/AMCs are the first category
and data theft and the of company facing threats. The
subsequent sting operations next is NBFCs, Investment Banks,
followed by US and UK has left Venture Capitalists, Private
many in lurch. With outsourcing Equity.the other categories
on the rise in the mentioned in the survey are –
financial-services industry, Media/Software, Retail/Consumer
there has been widespread products, Foods/Beverages,
discussion about the security of transportation, Power/energy.
sensitive data. As we all know,
The threat perception of these
data is the lifeblood of the sectors is generally higher
internet driven industry and its mainly on account of the nature
integrity cannot be compromised. of their businesses and high
However, there is a more intense growth rates achieved by these
frenzy around data security and sectors in the last few
outsourcing abroad. years.
What is the nature of threat?
Why are the Organizations
Recent survey by KPMG says threatened by fraud?
that there is a digression in the
According to a survey lack of
Industry nature which is facing ethical values has been
security threats .Some four years identified as one of the main
back it was the IT outsourcing reasons for frauds in
industry and retail industry organizations. Some of the other
which were most prone to data reasons can be enumerated as
theft. But now the nature has follows:
changed. Most of the frauds
- dissatisfaction among
uncovered recently have been employees
faced by companies dealing in - poor internal controls
financial services. - lack of ethical values
Banking/Insurance/mutual - collusion between vendors and
employees attitude of organizations towards
- inadequate background checks on fraud. Now they are becoming
prospective employees increasingly proactive in their
management override of approach.
control Most of these companies now have
How were these frauds either a code of conduct or an
detected?
ethics policy in place as a
Majority of these frauds were proactive measure to mitigate
detected by a company's own risk of fraud.
internal audit or by a third
How can the frauds risks be
party. Some of the other ways in mitigated?
which an organization lost its
Most of the companies in India
revenue and it came to light has are now undertaking strict steps
been through:
in ensuring the minimum
- expense accounts occurrence of fraud in
- false or incorrect information outsourcing financial services.
- personal use of official assets Some of them are:
- forged documents
- Pre- employment background
- secret commissions / kickbacks check
- cheque forgery - Regular fraud risks assessment
- forged documents - Data analysis tools
- false financial statements - Fraud management systems
- IP infringement
- Data mining tool
What is the attitude of
In addition all the individual
organizations towards frauds?
employees are now being provided
Earlier the trend was that the with proper systems to inform any
organizations seemed to be more kind of fraud threat at the right
reactive when these frauds earnest. Some of them are:
occurred. But over the years
- Emails
there has been a shift in the - Direct approach
- Anonymous letter/call also being stored. This is an
- Hotlines understandable concern, but
- Grapevine again, it is no different from
What is the outcome of the sending your back-office data to
frauds -real as well as ADP, which processes a good deal
perceived?
of Industry’s trades, or to Sun
Outsourcing to India, China, Gard for data storage and
Russia, etc is really no back-up.
different from sending data to
The real fear revolves around
what were once called service the mistrust of people and what
bureaus or what we now call they might do with the data –such
application service providers. as selling it to a competitor.
It’s been done for years and the There are certainly unscrupulous
onus has always been on the people everywhere-and quite a few
financial services firm to make in the US securities industry.
sure it does its due diligence Anyone can steal information or
before choosing a partner. The data and sell it to competitors
security threats, these vendors or use it for their own personal
face abroad are the same threats advantage. However, it’s no more
securities firms themselves face or less likely to happen
when data is housed on site. As a overseas. The concerns around
result, strong firewalls and a outsourcing security have been
formal data security strategy exaggerated. This issue revolves
must be in place to prevent more around the anger of losing
hacking, viruses or American jobs, fear of the
misappropriation of data. The unknown, and, unfortunately,
primary concern, we found is that slight prejudice.
executives don’t like the idea of
How is India fighting
sending their data to a location back?
where their competitors’ data is
Recent sting operation in UK
done by Channel4 has exposed the intention of maligning its
seamier side of doing outsourcing reputation. The fear among the
business with India. However in Indian companies is that western
India there were mixed customers will hesitate to
reactions. outsource after India is
The Indian outsourcing trade repeatedly projected as an unsafe
body, Nasscom, and some senior outsourcing destination. Much to
company executives in India were its embarrassment the Industry
worried that the program, and has been hit lately by a series
sting operations in past, would of security breaches.
damage the country’s reputation
The industry is scrambling to
as a location with an abundant combat the perception of fraud.
supply of low-cost, skilled labor Companies have joined in setting
that delivers quality service to up a national skills registry, an
overseas customers. Nasscom said online registry for industry
that it had asked the Channel 4 workers that would contain
to provide details of the information about individual
allegations but that the request worker’s professional,
had so far been refused. “We are educational and personal
concerned about the verifiability backgrounds. The information is
of such stories, especially sting validated by an independent
operations where monetary agency but owned by an
inducements were provided,” said individual. So far, 25000 workers
Kiran Karnik, president of have registered for independent
Nasscom.
checks and biometric
Industry executives in India identification established
are suggesting that repeated earlier this year.
sting operations are being
Whether real or perceived no
undertaken against the Indian Industry can be completely free
Industry with the express from fraud. The opportunity of
outsourcing financial services to
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Article Tags: data, industry, outsourcing
